St. Charles aims to restore car shopping reputation

St. Charles leaders are considering a plan to return a portion of the sales tax revenues generated by a city Toyota dealership back to its owner, part of an effort to preserve the city's automobile sales industry.RICK WEST | Staff Photographer, 2009

Car sales are a major source of sales tax revenue for St. Charles. As such, city officials are ready to cut an estimated $1.4 million deal with owners of the St. Charles Toyota dealership to help revive the city's status as a car shopping destination.

The deal would have a similar structure to agreements city officials struck with Sears for an appliance showroom store and a West Chicago car dealership owner for a GMC/Buick dealership about a year ago. City officials agreed to rebate for several years a portion of the sales tax dollars those businesses generate for the city in trade for the companies setting up shop in the city.

Dennis Alf, president of St. Charles Toyota, wants the city to rebate sales taxes generated by his existing dealership at 2651 E. Main St. as well as sales taxes he hopes to generate by bringing a used car dealership to the former Richards Chrysler and Aamco lots at 1845 E. Main St.

Alf plans to purchase and improve the 1845 E. Main St. property at a total cost of about $1.5 million. The sales tax reimbursement would essentially refund the cost of the purchase and improvements over the course of 15 years.

In the first five years of the deal, the city will return 100 percent of the sales tax dollars Alf generates beyond the first $300,000. In other words, the city gets the first $300,000 of sales tax the business creates each year, and Alf keeps everything after that.

For years six through 10, Alf will get back 90 percent of the sales tax dollars he generates after the initial $300,000. In the final five years of the deal, he'll get back 75 percent.

If for some reason a car dealership doesn't succeed at the 1845 E. Main St. location at any point of the 15-year agreement, Alf must pay back all of the sales tax revenue he receives.

City projections estimate Alf would receive $1.44 million over the life of the deal. Meanwhile, the city would rake in $4.8 million during the 15-year agreement.

Alf sold aldermen on the plan this week as a move that can save St. Charles' automobile dealership industry.

"For years, St. Charles was king," Alf said. "It was a selling place of cars, and it was more powerful in the Fox River Valley than other areas. But it's a very competitive business. We've seen stores close here. We've seen manufacturers not want to come here anymore. It's important that we reinvest those sales tax dollars so we can be competitive. Otherwise, we will crumble."

City officials told aldermen the city's reputation as a place to buy cars is at a critical juncture. Aldermen are expected to approve the deal at Monday's city council meeting.

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